HQ size is all

The three determinants of the size and role of a company's headquarters (HQ) are the overall size of the company, the governance system and the corporate strategy - the way the company creates new value from its multiple activities.

by Strategic Management Journal
Last Updated: 23 Jul 2013

There is no right answer on how big the HQ needs to be. It will depend on whether the company wants to have extensive links with its various businesses or whether it wants to operate a shared service, such as IT, from the centre.

Executives often think they can save money by reducing the size of the HQ, but they need to be careful before making this decision. Is it right for them? Indeed, it is more often the case that companies with large HQs typically outperform those with smaller ones.

There are four tasks that need to be carried out by the centre: public company reporting, control, shared services and adding value. Executives should reflect on how their corporate strategy is adding value to the wider business and then work out which central functions contribute most to this goal.

The size, structure, and performance of corporate headquarters
David Collis, David Young and Michael Goold
Strategic Management Journal, Vol 28 No 4, April 2007

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